Obama's Energy-Policy Narcissism Is Right Out Of Al Gore's 'I Created The Internet' Playbook

“Political leadership” in Washington may be regarded as an oxymoron we tolerate as a polite fiction, but President Obama is abusing the privilege when it comes to energy.

President Obama provided a textbook example of Beltway narcissism in his State of the Union speech last week, when he claimed credit for the boom in domestic oil and natural gas production over the last few years: “The ‘all the above’ energy strategy I announced a few years ago is working, and today America is closer to energy independence than we have been in decades. . . [There’s] more oil produced at home than we buy from the rest of the world, the first time that's happened in nearly twenty years.”

This is a classic example of someone jumping in front of a parade going down the street and saying, “follow me!” Not since Al Gore claimed to have taken the lead in creating the Internet has a presumptuous politician been further divorced from reality. Most of the increase in oil production has come from two states—Texas and North Dakota—and overwhelmingly on private or state-owned land. The story is similar for natural gas. The Obama Administration has been reflexively hostile to oil and gas production on public lands, and if Washington and the environmental lobby had any inkling a decade ago that “fracking” would revolutionize domestic oil and gas production, they surely would have done something to stop it from happening. The domestic energy boom owes its success precisely to the extent that dramatic private-sector innovations happened quietly and mostly out of view from Washington.

Few tropes of Washington are more absurd that the fetish that by twisting the policy knobs in Washington, we can rearrange the energy marketplace to have cheap, abundant, domestically-produced energy that uses no hydrocarbons, creates millions of new jobs (Secretary of State John Kerry repeated this nonsense again just last week), emits no pollution of any kind, and helps you lose weight along the way. Nor is this fantasy limited only to liberal Democrats. Republicans, especially from farm states, repeat the same clichés, and vote to keep up the egregious subsidies and mandates for corn ethanol and wind power. (To call our ethanol program a “boondoggle” is an insult to boons and doggles alike, but that’s a subject for another day.)

To the contrary, forty years of ambitious energy policy by administrations and congresses of both parties have done little to change our energy marketplace, while much of the time out energy policy has been harmful. That’s the conclusion of the best book on energy policy for a very long time, Peter Z. Grossman’s U.S. Energy Policy and the Pursuit of Failure. Grossman, an economist at Butler University, meticulously reviews the iterations of energy policy aimed at “energy independence” going all the way back to the Nixon years, and finds that energy policy is either irrelevant to reality or counter-productive.

Our energy policy panic began in the early 1970s when the rise of OPEC disrupted global oil markets and roiled economies, and the energy policy story has followed a familiar epicycle ever since. But, Grossman argues, “government actions have done little to solve these disruptions; if anything, disruptions have become bigger problems when policy makers tried to fix them.” Grossman doesn’t spare Republicans from the energy illiteracy and magical thinking that propels the pols forward: President George W. Bush pushed two major energy plans through Congress during his presidency, both stuffed with nonsense.

“Policy makers have learned nothing from the past,” Grossman writes; “They will pursue a course of action that sounds pleasing to voters but has no chance of success. They will willfully pursue failure.” True enough, “energy independence,” “renewable energy” and other shibboleths poll extremely well with voters. But there’s more than just pandering to low-information voters at work in this story. Energy policy involves more than usual the Washington hubris that political institutions can make better decisions about resource production and allocation than markets.

My favorite quotation from Grossman’s extensive research into the archives of federal energy policy is a Carter Administration document about the premises of their energy strategy:

The first assumption for any commercialization activity by the government is that the market either has failed or will fail to make the optimum choice. It maybe a failure in selection, i.e. the market will not select the ‘proper’ process or product, or it may be a failure in timing, i.e., the market will not make its choice at the proper time—will not commercialize soon enough. In either case, the basic presumption is that the government policy maker can make a better selection than can the market. (Emphasis in original.)

Nothing has changed since the Carter years. The presumption that politicians know better than the market brought us such recent “superior” government-chosen energy technologies as Solyndra. By now it should be obvious that government failure is much more pervasive than market failure; although this is true in many policy domains, energy is the most egregious example. The marvel of America is how the productive and creative private sector in energy simply chugs along amidst the Washington circus. We’re on our way to becoming the world’s leading oil producer in another year or two. Imagine what we might be able to do if Washington’s energy narcissists actually encouraged this, instead of tilting literally at windmills.